1. Economic Crisis and the Reagan Revolution

2. Oil Crisis Yom Kippur War Oil Crisis Auto makers in trouble
Imported 33% of our oil
OPEC (Organization of Petroleum Exporting Countries) – embargo
Impact
1974 – embargo lifted when Israel withdrew from occupied territory
Auto makers in trouble

3. Ford’s Presidency
OPEC continues to limit exports, driving prices up, creating shortages
Chief issue: inflation – prices go up and value of dollar decreases
WIN (Whip Inflation Now)

4. Carter Adminstration Energy alternatives failed
Causes of Economic downturn
energy shortage
Companies got big and did not respond well to changing technology
Stagflation
Spending on social programs increased creating a 72 billion dollar deficit by 1980.
Top tax bracket 70%
Discussed lowering taxes, but doesn’t do anything
Energy alternatives failed

5. American Concerns American Concerns… Reagan pitched Social change
Loss of American power and influence in world
Reagan pitched
Conservative ideas
Big government is the problem, not the solution

6. Why Reagan Wins People dissatisfied w/ Ford/Carter presidencies
Return of values from evangelical Christians
Moral Majority – challenge abortion, feminist movement, sex education in schools
Middle class/working class – did not approve of tax increases of 60s/70s
Reagan’s primary goals
stimulate the sagging economy
cutting both government programs and taxes

7. Supply Side Economics Lower taxes = more money in pockets
More money in pockets = increased spending/investing
increased spending/investing = economic growth
economic growth = more earnings for Americans

8. Reaganomics Reduce Growth of Government spending.
Reduce Income Tax and Capital Gains Tax.
Top tax bracket – 28%
Reduce Government regulation.
Control the money supply to reduce inflation
IRAs
Deficit spending
Opponents called it “voodoo economics”

9. Stagflation Defeated Broke cycle of stagflation, how?
Increased interest rates – less borrowing
Inflation dropped (helped by falling oil prices)
Unemployment reached 10%
Growth started in 1983
Unemployment dropped to 5.3%
Tax cuts and military spending increased the deficit and shot down goal of balanced budget

10. The Great Communicator
Compelling speaker
mixture of folksy wisdom, empathy, and concern while taking humorous digs at his opponents. “we need to cut social programs to save the good ones”
He will make cuts to Aid to Families with Dependent Children (AFDC), food stamps, rent subsidies, job training programs, and Medicaid
Survived assassination attempt in 1981 helped his popularity
Congress passed his Economic Recovery Tax Act

11. Deregulation & Unions Reagan deregulated industry, financial services,
Professional Air Traffic Controllers Organization (PATCO)
12,000 striking ATC fired by Reagan
Saw a more hard line attitude towards unions.

12. Culture - Yuppies
Hippies were the youth of 1970s who reflected the culture
Yuppies were the youth of 1980s who reflected the culture